Denmark reaches goals for solar energy eight years ahead of time

Enormous interest in solar energy solutions has resulted in much faster than expected growth in the industry. Just last year the Danish Ministry of Climate, Energy and Building set the goal for Denmark to reach a solar energy capacity of 200 MW by 2020, but the goal will be reached this year as demand for new capacity has exploded Currently 36 MW of new solar is being installedevery month and Danish energy sector players, Danish Energy Association and DONG Energy estimate an overall capacity of 1,000 MW by 2020 based on the current growth rates.

This new growth has been spurred by favourable framework conditions set forth by the Danish state such as investment tax credits and the use of net metering. Net metering is particularly favourable in Denmark because of the high duty level on retail electricity.

Solar energy is only one element in an aggressive green strategy promoted by the Danish government. Denmark has a strong and broad political commitment to renewable energy, and earlier this year, the parliament entered into an ambitious agreement that will assure that 35% of the Danish energy supply will be based on renewables by 2020, increasing to 100% by 2050. Already today, Denmark covers 22% of the national energy consumption with renewables.

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Gold medal for Offshore Center Denmark

Offshore Center Denmark, a Danish innovation network in the field of wind turbines at sea, and the oil and natural gas industry receives a gold medal for their efforts. The cluster organisation is a platform for showcasing the Danish competences in the industry with the aim of creating growth and cross-organisational collaborations.

The gold medal is given in the category ‘Cluster Management Excellence Labels Gold’, which is the highest obtainable level in the EU. In the European wide category Offshore Center Denmark was up against 350 network and cluster organisations. The center took 134 points across the 31 areas of evaluation, and this is the highest number of points seen so far in this category.

Since 2001 Offshore Center Denmark has worked to position Danish companies in the industry for international collaboration. Amongst other initiatives the center organises B2B events where Danish and international organisations get together to discuss future collaboration opportunities as well as past experiences within the sector.

More about Offshore Center Denmark at

New Danish energy agreement

It is no news that Denmark is on the forefront in terms of clean technology and known for its ambitious climate and energy policy. Denmark has for long time taken the leadership in creating a global agenda addressing the challenge caused by climate changes. Just recently the Danish government has finished the energy agreement setting the framework for the policy on climate and energy up to 2020 and outlines the direction Denmark will take to become a fossil fuel free society by 2050.

In broad terms the agreement stipulates that:

  • 12% less gross energy consumption by 2020 compared to 2006
  • 50% wind power in electricity consumption in 2020
  • Substantial investments in biogas and other sustainable energy sources

In order to reach these goals, the agreement specifies that a total of 3300 MW wind power will be build in the coming years. Hereof 1500 MW will be offshore wind farms, while the remaining capacity will be land and coastal wind farms. Furthermore, the agreement is incentivizing increased focus on biogas as a central source of energy. Funds are made available to subsidize investment and the transition to more biogas and other sustainable energy in the overall energy supply.

The parties behind the agreement represent 171 out of 179 in the parliament. This sends a signal to the business community that there is a strong political support behind the initiatives and that continuity can be expected. The agreement will push between $15 – $26 billion in new investments in sustainable energy and assures that Denmark will continue to be an attractive test market for next-gen technology.

Also, a month ago it was announced that Denmark is ranking first on the Global Cleantech Innovation Index”. As an effort to maintain the international stronghold, research and development in clean technology will be strengthened with the agreement. Today, 10% of total Danish exports is within clean and energy technology, which also takes up 12% of total industrial production. And with a growing global market for these technologies, there should be rich opportunity for Danish cleantech companies to reach out to international markets to exploit technological advantages to solve energy problems.

Contact Innovation Center Denmark to explore opportunities for your company in Denmark or if you as a Danish cleantech company wants to look for opportunities in the US.

For more information about the agreement, read the press release from the Danish ministry of climate, energy and building here.

SV Forum’s Annual Cleantech Conference, Part 2: Cleantech investment opportunities

Read part 1 from SV Forum’s Annual Cleantech Conference here

Reflecting on the money rush of 2006-2009 and some refreshing realism from the investor panel

Jason Matloff, Battery Ventures, Rachel Sheinbein, CMEA Capital and Dylan Steeg, Intel Capital started the investor panel by outlining their views on the evolving role of venture capital in the cleantech space and by pointing out some of the limitations of the VC asset class.

The sweet spot for venture capital is about $50-75 million in total funding needed in order to reach exit. What happened in 2006-2009 was a unique period of time when money came from other asset classes (hedge funds, private equity etc.). In addition, industrial multiples are much lower than for tech companies so valuations were inflated. None of the panelists expect there ever to be another batch of companies like the current class that is now coming to maturity and have raised hundreds of millions in venture capital (think Tesla, Fisker, Solyndra, Miasole, Bloom, A123 and many others). Venture capital is not seen as a vehicle to fund science projects and should not be exposed to novel manufacturing practices, high degrees of science risk or massive scale manufacturing projects with a high cost to prove either the technology or the economics (utility scale renewable energy, car manufacturing).

There is a new realization among investors that it is very difficult for startups to compete against mature global companies in markets where the end products are not differentiated and margins are thin. Therefore in the viewpoint of several of the panelists, that VC investment in companies that plan to compete in the commodity manufacturing space will continue to fall.

In addition investors are discounting any company that depends on government support which is fading throughout the world given a variety of dynamics in the public sector (politics, lack of good will, budget constraints).

Newfound realism leads to better investors and sharper entrepreneurs

While there is not a 100% overlap between cleantech market opportunities and the types of companies that VCs will fund, VCs remain very active in the space with a new focus on capital efficient companies potentially using a fabless operational model. Entrepreneurs should be selling a premium product with healthy margins not competing on the commodity energy and water markets because of the scale required and the maturity of industries they are up against.  Software, ICT, power electronics, systems solutions, analytics and automation were consensus areas of interest among the panel.

Companies need to be very sharp in understanding what it will take to scale the company and reach a sizable market. Who are the intermediaries that will be key to the success of the company?  In many cases the success depend less on the technology than on the business model and the ability to execute of the team. In the cleantech space many companies are dealing with an entrenched value chain so partnership is very important.

For emerging technology companies it is increasingly important to understand where in the value chain you are innovating and where you leverage existing infrastructure both from a technology and manufacturing standpoint as well as in the go-to-market strategy where partnership with sales channels that already have key relationships can be crucial.

With those words of wisdom for entrepreneurs, the investors finished the panel on an optimistic note predicting that with a more focused approach the VC community will continue to actively invest sizable amounts in promising early stage companies that are addressing global energy and resource challenges.

SV Forum’s Annual Cleantech Conference, Part 1: Opportunities and Challenges for EVs in 2012

Realism and a bit of pessimism at the SV Forum Annual Cleantech Conference

On January 19, SV Forum’s Annual Cleantech Conference brought together entrepreneurs, investors and the business community at large to discuss a range of topics including electric vehicles, green building, new technology opportunities and the investment climate for early-stage cleantech deals. In my years of attending cleantech conferences I have found the sense of realism refreshing and there was a real back to the basics roll up the sleeves mentality among the audience.

Electric Vehicles will take time to have a profound effect on the market.

“EVs primarily face a market adoption problem, not an infrastructure challenge, to move from early adopters to mainstream buyers,” said Thilo Koslowski, vice president and distinguished analyst at Gartner, as he recapped Gartner’s 2011 report about EV readiness in the US.

More information about the Gartner EV report (for a fee) can be found here.

His predictions are that EVs will be an increasingly important part of the drive train mix but growth will be slow and they will not make a significant impact until the 2020 time frame (3-5%). Note that the overall market for hybrid electric vehicles is about 2% of all vehicles sold in the US, about 270,000 in 2011 and over 2 million sold since their introduction in 1999. On the Gartner hype cycle, EVs are on the downswing but have not reached bottom yet as EVs have not been able to meet the unrealistic expectations placed on them as a magic bullet for all consumers. Gartner notes anecdotally that interest and enthusiasm seems to be waning both on the consumer side and among the auto manufacturers. Nissan Leaf and Chevy Volt have sold less than expected and there have been technical challenges for the Volt.

However, Gartner’s pessimism was countered by a panel that included EV manufacturers Coda Automotive and GM. They see 2011 as laying the groundwork for a very bright future with over 18,000 EVs sold even though only 3 options were available (Tesla Roadster, Nissan Leaf, Chevy Volt). 2011 EVs are 3x what hybrids were in 2000 and there has been overwhelming positive consumer response from those who have purchased EVs. In addition Gartner themselves forecast EV sales to reach 100,000 in 2012 and a wide range of new models to be launched.

Byron Shaw of GM noted that if you look at it from the perspective of % of total vehicles sold then it doesn’t look good. But if you look at it from the perspective of year on year growth, 2012 will be a huge year. Most of the major auto makers are launching EVs in the US in 2012 including 4 in the next 12 months by GM alone.

He noted that while many EVs will not meet all consumer needs, among vehicle-owning homes, two thirds of them have 2 or more cars and an EV can be seen as viable commuter car in most urban areas.

Challenges moving forward

While batteries (price and range) are the main limiting technical factor, more importantly, public awareness and education are the biggest barriers to moving from the relatively small early adopter market to wider acceptance in the mainstream market.

There has been early success in putting the vehicles out there, but it seems like the excellent driving experience has been undersold and there is still anxiety about lack of public charge points. Furthermore, the automakers have not succeeded in raising consumer awareness about the benefits and limitations of EVs. The operational benefits are not well documented and depreciation is still unknown. Upfront costs vs. operational savings are not a main buying factor for vehicles today and will require rethinking auto purchases.

Read part 2 from SV Forum’s Annual Cleantech Conference here.

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